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tv   Power Lunch  CNBC  September 19, 2012 1:00pm-2:00pm EDT

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3w679 k6 b.k. >> dva. >> grasso. >> xhb. >> axl. >> back to bally on the short side. follow me on twitter. "power" starts right now. we have a very special hour in store for you. in 35 minutes, we will have the man of the day, groupon's ceo, andrew mason. his stock has been a mess since the ipo about a year ago but today he will share his turnaround plan with us. at no time have japan and china been at each other's throats like they are today. at least not since world war ii. their ships are shadowing each other over disputed islands and fishing grounds. how bad might this get? and then, there is this man. he is smiling.
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he is richard maddigan. with us from jpmorgan's private bar bank. the market has questions. today he has answers. we talk about groupon? let's start with this chart. since the ipo in november of 2011, it is down 70%. obviously not good if you hold the stock. today, however, we have a gain of 9% in groupon as the ceo starts talking about his company's future. julia boorstin will speak with him live. but first julia has more on his plan for his ailing stock and the company. julia? >> reporter: sue, some news from groupon today. it's taking on the big guys. square, american express, paypal, google, launching its own mobile payment system. groupon's advantage is the fact that the service is part of its existing merchant apps and it has lower fees. groupon payments will charge 15 cents per credit card swipe,
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plus fees of 1.8% for mastercard, vee ka and discover. and 3% for american express. this compares to square's flat 2.75% flat, per swipe fee. this sent groupon's shares soaring, the stock higher on anticipation that groupon will benefit from transaction fees but, perhaps more important, from data about how consumers spend money. groupon shares are still down more than 70% since its november ipo as the company struggles with with slowing growth. groupon says it will be able to process payments overnight compared to the two to three-day processing time of some of its rival services. and mason does say that the company is committed to maintaining lower fees. so the question is whether groupon will be able to lure merchants away from rival services. we will be sitting down with groupon's ceo andrew mason in an exclusive interview coming up on "power lunch." we're sure to address all of those issues. >> look forward to it very much
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in about 33 minutes from now is that live interview. there is another big tech story out there today and it is apple. the new operating system that apple is launching, it is launching it as we speak. after topping $700 on the close yesterday, it is at $701.35, off just a fraction of a percent. jon fortt's live in san jose, california with the details. jon? >> reporter: right now apple is pushing the ios update. it has apple's new maps app built on their own technology. also includes 3-d maps. what this sort of does is give a taste to people who already have apple devices, including existing iphones, what the iphone 5 will be like. iphone 5 comes preloaded with ios 6. that officially goes on sale early on friday so apple could
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get the effect of perhaps iphone 4 and 3gs users getting the update and thinking i would sure like this on a bigger screen. that's what apple hopes will happen. a key factor to watch here is the upgrade velocity. how quickly do existing owners of existing apple devices upgrade to ios 6. what's particularly important here is google maps is gone. even some of the earlier reviews that have been pretty glowing of the iphone 5 have said, well, the maps product isn't quite as good. it is important for apple, for people with devices, to upgrade as quickly as possible because that helps them on their developer story. that lack of google maps perhaps could hurt upgrade velocity but we'll see. >> jon, thank you very much. a story we've been following all week. another big drop in the oil market. the sell-off starred on monday but it's continued throughout this week. right now crude oil is down on the trading session better than $3 on the trading day. brent crude is down $3.50.
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>> sue, we're near the lows of the session for crude oil. we definitely saw losses extended today when we got the report from the energy department showing a huge increase in crude supplies over the past week up to 8 1/2 million barrels was the increase for the week. a lot of that had to do with the big jump we saw in imports some are saying as residual effect from hurricane isaac. a lot of the crude had been on tankers and is now able to get onshore. we are also looking at volatility in light of the october contract for futures expires tomorrow. some say that's increased the volume we are seeing in this trade. a lot of talk about supply from the saudis, as well as iran. all of that could contribute to what we're seeing in today's trade. >> sharon, thank you very much. kilburg capital's jeff kilburg is with us all week. jeff, it has been a pretty dramatic decline since monday. how do you play it in this market? >> you're right. the volatile geopolitical backdrop really hasn't changed but we've seen the
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high-frequency trade. we saw that come into the market, really came down. now near lay 9% move down in crude oil. but uso, that's the etf, it is not changed in the big picture from quantitative easing and political tension in the middle east. i think all the longs are getting squeezed out of the market and we should see oil go back up. investor sentiment on the rebound after the financial crisis of 2008. but investors do say they are worried about the looming fiscal cliff. so how are these two forces playing out in the market? our power player richard maddigan is the chief investment officer at jpmorgan private bank, $830 million under management. a lot of measures from the nbc news/"wall street journal" poll to others indicating that sentiment, feelings about the economy, feelings about the market, the fact that house prices seem to be coming back a little bit, making people feel
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better. how are we doing in the economy and in the markets? you feeling better? >> it's funny, we are. your tee-up on the big smile on the face. i think we're all feeling a little bit better. some distrust still around the political so we have issues in terms of transition in the u.s. here. obviously china as well. we can go back and talk about that if you want. but reality is if you look at second derivatives or the change in change in broad economic data, the u.s. does look like it is getting better. i think a large part of the push into fiscal policy right now is make sure we keep that momentum. >> getting better, not getting great. >> the trick is the difference between the economy and 2% growth and 3% growth we won't feel. reality from a policymaker is stall speed. 2% if we go lower, we'll be talkitalk ing double dip. it's not in the cards for us in terms of the outlook. >> you said there's no reason to hate everything in europe anymore. >> from the last time on in august i told you we were looking at europe. we've actually added to european exposure for our client
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portfolios. europe was easy as kind of the unilateral trade to not trust because of policy. the issues we've seen in the last two weeks to me have taken a large part of the left tail risk in the crisis out of it. he put a bazooka out there. you hope it is insurance and he doesn't have to use a lot of it but it is out there. >> speaking of ba skzookas aime right at the heart of the u.s. economy. now that we know what's going on in europe and what bernanke is doing is turning very unmistakably to the fiscal cliff. does that have you worried? >> it does. i think the huge take-away catchphrase, the fiscal cliff is not y2k. washington is not as well prepared. y2k was a non-event to us because we spent three, four years putting tech budgets in place to make sure we bridge it. intermediate concern in the next two months markets have the assumption we will fight but resolve. i do think we'll resolve it but depending on how the elections
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play in november and the likely fact we'll have a divided congress -- which i think is more important in this election than the presidential seat in rotation, means we'll have a fight again. moody's threatening a downgrade from the aaa. the s&p's done it. but in the construct of all that noise we look at an opportunity to buying into risk assets, not selling. >> we'll talk more when you return in a little bit. two key numbers on housing out today. diana olick follows that beat and she has them both live for us in washington. >> that's right, sue. home sales and new constructions both in the positive in august leading realtors to say that this housing recovery is becoming "much more convincing." take a look if you will. existing home sales up 7.8% month to month to the highest level in two years when we had the home buyer tax credit juicing activity back then. fewer distressed sales in the mix last month. that's foreclosures and short sales. just 22% of the toastle. that's down from as high as 40%
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in the last couple of years. that's because volumes of those foreclosures are way down. still though, cash is king. nearly one-third of all home sales in august in cash. historically that should be down around 10%. you can see it in the weekly mortgage applications. despite rates hitting a new record low on the 30-year fixed last week, purchase outspelled 4% according to mortgage bankers. housing starts were a little below expect statiation but did slightly month to month. multi-family starts still outpacing single family as rental demand just refuses to weaken. the bottom line is the numbers here are very good despite the headwinds. the biggest concern as always is that banks are pushing through that big pipeline of distressed loans. we've got to see how quickly they will do that and that will change what the dynamic will be coming up this fall. we've got plenty more analysis on the blog. realtycheck.cnbc.com. now the market flash.
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>> the subject of this flash is wynn resorts, popping nearly 2.5%. they freed up $700 million in cash after the termination of an amended and restated credit agreement. in plain english, they've got this cash now. are they going to use it for general corporate purposes? some are saying they are smelling a special dividend here so maybe they'll return it to the shareholders. either way the market likes this. that chart up nearly 2.5%. >> thank you. next up, two great stories. julia boorstin and michelle caruso-cabrera going to bring them to you. >> klein and japan are at each other's throats, perhaps like at no other time since world war ii. their ships are stalking one another and there are major fears about how it could escalate and what it could mean for the markets. that's next. first though, here's julia. >> michelle, in about 20 minutes i'll be talking live to the ceo of groupon since the company went public last year. shares have been really beaten up, down more than 70%. but now its ceo has a plan to turn them around. that's live and exclusive coming
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welcome back to "power lunch." we are looking in the tech space, a report out that south korean samsung will slach its investment in the semiconductor business next year. that's in the south korean media. it is trickling into of the other stocks. barclays says it is clearly
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negative for lamb research. companies like nanometrics as well all seeing red today on a day when the markets are actually doing okay. >> indeed they are. treasury market had a big move earlier this morning. let's get an update from rick santelli at the cme. some of those worries about europe resurfacing, inflaition issues out there as well. >> i also think what's going on between china and japan has gotten the market's attention but rates moving a bit lower doesn't necessarily fit the outcome that many fixed income traders are worried about. that of course is maybe china having a bit of a tantrum being the creditor to many countries. japan of course has the island issues. but with regard to china and the u.s., there are also issues. think november 6 and how both politicians, the president and governor romney are dealing with potentially manipulative issues of china. if you look at a 24-hour chart of 10s, can you see what sue's talking about. we are moving lower. what i find fascinate something
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a two-week chart. that real spike high? that's the yield established the day after the fed meeting on the 14th. since then we've been in a very narrow closing range with regard to yields. today, we're continuing to expand the downside of this. we haven't settled under 1.80% since the day after that fed meeting put us in this kind of curve steepening strat tha. after all the thoughts about the bank of japan and whether their currency was going to be moved lower versus higher, the dollar is back down not far away from retesting seven-month lows against that currency. japan and china facing off over several issues. the most pressing and potentially violent involves a string of islands in the east china sea. our chief international correspondent michelle caruso-cabrera is watching it very closely. hi, michelle. >> that controversy over the disputed islands is so heated,
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it's led to massive protests across china. so much so, chinese police now arresting the anti-japanese protesters. these protests have been going on for about a week now and at times have turned violent. forcing several japanese operat shut down and pull their staff out of the country. carmakers toyota and honda and also electronics manufacturers and panasonic halted production. today leon panetta urged a diplomatic end to the crisis. dispute between the two countries is over a chain of uninhabited islands in the east china sea known as senkaku in japan. the long standing dispute boiled over last week when japan purchased some of those islands from the owner. the chinese think they should
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control those islands. are you having trouble seeing them on that map? that's because they are really tiny. chins sanz boa chinese surveillance are mach e monitoring the boats. they both may be guilty of stoking nationalistic pride over the issue to distract their populations from other issues going on in both countries. last hour the white house chimed in saying they expect china and japan to resolve this dispute through peaceful means. meantime, the bank of japan is the latest central bank to announce more quantitative easing. the conventional wisdom now seems to be don't fight any of the central banks. chief investment officer at jpmorgan private bank is back with us. richard, you mentioned that the move by mr. bernanke was a real game changer for you. so if indeed that is the case, look out over the next six months for us. how would you deploy cash if indeed the central banks are pretty much on the same page?
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>> it is the co-insurance ens of the move. i guess i never believe in coincidence in terms of markets. in the last three weeks we've seen the ecb make a very aggressive stance here. bernanke literally put an all-in with regard to quantitativizing in the united states. you don't fight the bang of england, the bank of japan, people's bank of china, the ecb and the fed. this ends up being good for risk assets over the next 6 to 12 months. we've added stocks to european equity, looking at emerging markets again which has lagged. ironically specifically in asia, in a follow-up to the chinese context right now. but there is a lot of opportunity right now. >> what about china? michelle set up some of the diplomatic tiffs going on between china and japan. if you look at china's economy, a lot of people have written china off in terms of its investment potential near-term. doesn't sound like you were doing that. >> i think people are
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overembellishing the downside. valuation show we're at significant discounts but in a very nacent domestic value. we're missing point with regard to 7% 208% growth is still very dynamic in china. they have beter response to the global markets. i think the reality to china is we don't want continued expectation of 10% growth. we want 7% growth domestic markets much more stable. but we need global growth and again, all of the central bank stimulus is going to help on that next year to resuscitate chinese markets, emerging markets and to help prevent the recession in europe getting worse. >> you mentioned that you shouldn't throw the baby out with the bath water with europe,
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but if you look domestically, the last time we talked to you, you were also interested in high-yield corporates, high-yield parts of the debt market. does that still hold? is that still a viable alternative to you? >> it does their fair value, i think like everything in the markets today. it is tempering expectations. we are not going to make 12% to 14% in extended credit and high yield next year. we're at spreads of about 550 basis points over treasuries right now. we think the fault risks are still light. we think 1.5% to 2% quality risk is more than compensated for. trick is how do you take risk. if you look at what private private investors have done, munnys to investment grade to high-yield to emerging market debt to hedge funds, we are stuck looking at commodities. people jumped in the high-dividend stocks to begin with, people now have to start adding equities back into your portfolio. your expectation return should be 5% to 6% in the next months, not 12%.
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>> richard, thanks for joining us from jpmorgan private bank. three names that you never expect to be back-to-back are indeed coming up back-to-back. we're analyze being the animaly who analysts. julia? >> we're not in this gym to work out but to show you how cash is becoming more and more obsolete. groupon wants to become the world's new currency and the ceo is here to explain how it's all going to work. groupon stock is up big today on the new plan. more "power lunch" is comie inrt up. [ male announcer ] when a major hospital
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time to analyze this with jeff kilburg of killer capital management. irish play michigan this week. i'm off the rest of the week so i'll wish you good luck and all my friends at michigan, well, i wish you good luck, too. jpmorgan upgrading vera bradley from overweight to neutral. you buy a direct sale business, you get a wholesale business for free. jeff has a whole collection of vera bradley bags. >> i do. i like this call. at the end of the day, an odd coupling. ft. wayne, indiana is where they're headquartered.
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a lot of hedge funds own this name. i like it. >> raymond james, upgrading webster financial to a strong buy from outperform. expecting the company to "report a positive aps." surprise wld it reports q312 results. >> they really care about their customers. i hope they go to the moon right now. i think they have traction with their customer base in the northeast. >> james hardy industries. ubs downgrading it to sell from neutral noting at current levels this stock looks expensive to them over one years the shares have more than doubled. don't know what they do. >> they're into building construction. soffits, siding for outside. in the end of the day, i believe in the housing turnaround so i'm not on-board with this call. certainly the call a long way since the '09 era, but right now
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i think this is an important piece as we continue moving -- >> maybe one to hold. >> jeff kilburg, thank you. the finance.com poll today is more tech companies are introducing virtual wallets, complete mobile payment systems. do you trust them? the results will come up along with julia boorstin and the ceo of groupon. julia? >> tyler, that's right. andrew mason is in the building. this gym is one of the first businesses to use groupon's new mobile payment system. andrew mason will tell us how it works an explain what it could mean for the company's big picture strategy. coming up right now on "power lunch." tdd#: 1-800-345-2550 when i'm trading, i'm so into it,
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gold prices closing right now. it's been a volatile week for the metals markets. sharon epperson is track being the action at the nymex. it is not oil this time, it is gold. >> it's not oil -- it's gold, but you got to talk about both of them at the same time because really only reason why gold is not higher today is because oil prices are down almost $4 right now. keep in mind we are looking at gold prices that are still above that $1,770 level. basically flat on the session but we've seen tremendous gains since the fed action last week in the gold price. that activity is expected to continue. technically a lot of traders are
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looking at the fact that gold is very near a golden cross right now, meaning that the short-term moving average, say the 50-day, is now crossing over the 200-day. that's often seen as a very bullish signal for market longer term. longer term, several firms we heard from earlier today, one from morgan stanley about his call on gold going higher. we know bank of america, merrill lynch, is saying $2,400 by the end of 2014. it looks like gold prices definitely heading higher because of the policy by the fed. you see what happened in the prior qe1, qe2, operation twist. and now qe3. that's expected to take gold much higher. to trading action here. brian schactman is here on the nyse floor. steady as she goes. >> the dow transports, people like it whether they lead. the last four sessions they have not led and today they are. when you look at the intraday here, obviously gained some
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strength on the heels of the existing home sales. that was a definite boost. you can't underplay what's going on with oil. oil is having an impact on so many things right now. we've talked about the airlines but you have to look at these numbers. it is a volatile sector but these are some big moves, some big names. united, that's almost 8% move. almost 8% there. the other name that's maybe not getting enough play, facebook. believe it or not. >> that's a long awaited bounce. >> that's heavy midday volume right there. there are some reports they're testing mobile apps and third party apps. whatever the catalyst, that's a sharp move. this is up pretty sharply in the last couple weeks here. if you bought at the bottom, you did pretty well. obviously if you bought it at the top, that's a different story. >> hopefully if you bought it at
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the top, you're a very long term investor. >> we could have new closing highs in the nasdaq and dow. speaking of the nasdaq, let's get to the nasdaq where bertha coombs is following the big mover. >> questcor is a biotech company. it has one drug. this morning reports are that aetna is only going to reemimbue it in certain cases as a second line drug. what's interesting is how the stocked moved this morning. the intraday chart had steadily moved lower. we talked at the nasdaq why did it did not trigary halt sooner. under halt rules, it is a 30% move but it has to be for five minutes a row, rolling five minutes. that's when it triggered. it was after 10:30 this morning. meantime today as far as other stocks on the move, apple lower today as it rolls out ios 6. facebook at a six-week high today.
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facebook was implicated today in samsung and iphone -- the iphone rivalry. samsung asking its users which phone would you take to a desert island. seems like the apple fan boys got on there and overwhelmed the vote. >> bertha, thank you very much. the deal a day company groupon is taking a big gamble now on mobile payments. julia boorstin joins us with an exclusive interview with groupon's ceo andrew mason. julia? >> thanks so much, tyler. we're joined now by andrew ma n mason. andrew, thanks so much for talking to us today. the mobile payments business is crowded with deep pocketed, established players like google, amex, square, paypal. why is your system going to work? >> the reason we launched groupon payments today, it really started with making our deals product better. when we started groupon four years ago, in order to use one, would you have to print out a sheet of paper and bring it to the merchant.
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the merchant would have to track all these paper coupons and it was a tedious process, both for the customer and the merchant. we've gotten better. we now have reception taking place on mobile devices, both the consumer application we have on iphone and android and merchants have their own iphone application that they can use to track redemption. but this really takes it to the next level. where we can do seamless closed loop resemgs between the customer an merchant. one of the most tedious parts of using groupon it made much better. just improving the process for consumers wasn't enough. we also wanted to do something really disruptive and we realized because we have this great deals business for our groupon merchant partners, we can give them guaranteed lowest pricing in the market. our pricing for the groupon merchants that are using payments is 1.8% plus 15 cent per transaction and if they can find a better price, then we guarantee that we'll beat it. >> if you're guaranteeing lowest
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rice, you're clearly investing quite a bit in this product both in technology and in marketing it to merchants. how are you going to make money from this? >> well, we think about our business as if we focus on making our customer experience better, both consumers and merchants that interact in our marketplace, over time our market share will grow and we will have a better business. the share price and shareholder value will follow. so one way that that could work is what we're really doing with mobile payments is plugging local merchants into the web and that allows us to do all kinds of interesting things making it easier for them to run more deals which is really how we see ourselves making more money. we're all about selling groupones and we think this is going to help us sell more groupones. >> at what point do you expect the mobile payments business to boost your bottom line? >> we're not focused on each of these businesses as boosting our bottom line. they don't need to be wildly profitable on their own.
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what we're really focused on is using these additional services to strengthen the value proposition that we have for our merchants. >> now you have gotten a vote of no confidence from wall street. the stock is down by over 70%. what are you going to do to regain investors' confidence? >> we're certainly not happy that we've been as misunderstood. all we can do is continue to focus on growing the business and providing value for customers and merchants. we're in the business of putting local commerce online, doing the same thing for -- that amazon did for products we're doing for local commerce. and we're still in the early innings of that opportunity. local commerce is a $3 trillion market. most local transactions do not involve groupon today. so even if we can get a very small piece of the overall local commerce market, we think we can build a great business over time. we're really focused on what we can do over the long term there.
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>> you say you're misunderstood by wall street. but specifically here you are launching a new business. is this going to convince wall street that the company's on track? i mean 70% down over a year. >> i think that this product improves the value proposition that we have former chants. we can use payments to help merchants save thousands of dollars a year over what they're paying today. that makes merchants more likely to want to have a lasting, sustained relationship with groupon, and run more deals with groupon. >> i understand tyler back in the studio wants to jump in here. >> mr. mason, given the slide in the value of the stock, slowing revenue growth, the company clearly has a fair number of critics, some of whom question the very business model of groupon. how do you -- some of them are very harsh, by the way. how do you feel when you hear those criticisms, what do you say to them, and what do you say to the critics who today are questioning why you would move in to with this mobile payments thing a crowded space and compete on price which sounds
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like it could be a race to the bottom. how do you respond to that? >> well, there's a lot of questions in there. i'll start by saying groupon is growing 50% year over year. that's pretty good growth. we're growing our customer base by 60% year over year. we've done that while reducing our marketing spend 50% year over year. so it's true, growth is slowing from 400% or more year over year. but if we continue to grow at those rates, pretty soon we would take over the entire gdp. so we're still getting -- growth is slowing but we're still growing at very healthy rates. there's a lot of -- i think any time that you're inventing a new business model, it's bound to be misunderstood. some people think that customers are going to become fatigues. other people think that the model is so good that we'll get beaten by competitors. all the data shows that those things aren't taking place. >> what are they
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misunderstanding, mr. mason, and why do they say such mean things about your company? >> i think that -- i think that the big misunderstanding is we're more than just a coupon company and groupon is in the business of taking local commerce and plugging it into the web. and with our close to 40 million customer relationships, our millions of merchant relationships, we're better positioned than anyone to build that marketplace where we can -- where we can really bring local commerce and more local transactions to be enhansd ced the internet. >> do you in retrospect regret going public? >> i think it is easy to monday morning quarterback on these kinds of things. we're very focused on the future, however. and we don't think it is getting in our way of going after our mission. >> you talk about being misunderstood. your leadership style. you stayed out of the spotlight recently. but what about your leadership
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style? has that been part of your problem with wall street? >> it's hard to say. i think wall street can rest assured that i've built a wonderful executive team around me of ex-members of amazon, of google, of sales force, of cisco. really a world class management team and i think we all come together to be the right mix for groupon. >> a number of recent studies point to merchant dissatisfaction. just this week raymond james said that one-third of the merchants polled were unsatisfied. 39% say they don't plan to do another groupon in the next couple of years. yes, there are some studies that point to higher merchant satisfaction but based on the stock price there is no debating that this is an issue. how do you plan to address it? >> i think there is debating that's an issue. one study came out recently that pointed to negative satisfaction with the merchants but there were eight studies before that that showed that merchants are happy. one frt leading research firms
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in this area has come out with a study that shows that groupon has the highest satisfaction of our merchants among all b-2-b companies that they're tracking. there are stories of merchants that have a bad experience. there's no business in the world that has a 100% satisfaction right. those stories are really fantastic, they're really entertaining. the merchant that sold 100,000 cupcakes and they were just completely overwhelmed by the orders. that's a good story and it is really entertaining. but there's a lot more safe landings than there are plane crashes and all the data supports that. >> well, unfortunately, we've run out of time but we look forward to hearing about how this mobile payments business interacts with the rest of your products and thank you very much for joining us today. andrew mason, ceo of groupon. thanks for talking to us. back to you guys over in the studio. >> whether i was mentioning critics of groupon, i rubbed my temples and i thought, and i thought, and i thought -- herb
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greenberg. you've been one of the staunchest critics of that company, of his management. did you hear anything that changes your view? >> no. it was sort of like you want to compare him to zuckerberg, which zuckerberg wcame out and gave hs recent presentation. this is just more trust us, down the road the shares will follow. you have this embryonic company. i don't think he made a strong case. a likable enough guy, sure. but you've got to do more than that. one thing he did say, he said people said the competition would come and take him over. the reality is the competition did slide away but that's because they felt this was not a viable business model for them. >> interesting word there. the competition will come and take them over. i wonder whether that's the future. they've got some big players on their board. >> players on-board is one thing. proof and doing and execution is another. >> herb greenberg, thanks very much. for the results of today's
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yahoo!/finance poll. do you trust mobile payment systems? 11%. only 11% say yes totally. 40% say no way. and 49% say one day maybe. call me maybe. but not yet. sue? thank you very much, ty. we have a cnbc investigation next that will make you think twice the next time you go to the grocery store. specifically, the produce aisle. it is a special report on the hands that feed america. a look at who is really pulling food from the fields before it gets to your table. and another massive gas fire along the u.s.-mexico border. the third in about a month. what's behind it? how could it hit you? that's next on "power lunch." ♪
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power lunch continues now. but let's see what's coming up next hour on street signs? >> coming up at the top of the hour, is the market predicting who is going to be the next president?
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we'll take a look at sector moves an a dow indicator that suggests yes. find out how you can position your money. and guess what? investor confidence is soaring. but with stocks at multi-year highs already, is that trend signaling a top or we going to feel a rip your face off value year end. also violence, anti-japan protests are sweeping china. we'll look at the economic fallout for the world's second and third largest economies. all those things coming up on street signs. back to you now on "power lunch." for the third time in about a month an actual gas storage or pipeline facility has burst into flames on the mexico side of the u.s.-mexico border. the facilities are owned by mexico's state run nat gas company. 26 people were killed in the latest attack. it is not clear how this fire or others like it started but criminal activity is suspected. this is something that you may not think about while you're shopping at the local grocery store or making your salad for
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dinner. but children may be picking your produce. these are not migrant children either. in a joint investigation with our nbc affiliate kntv, our investigations inc. team found u.s. citizens who have no other choice in order to make ends meet. investigative reporter stephen stock is here with this very important issue. >> during the weeks we spent in the fields we talked to children as young as 12 years old. some of them told us they've been working these fields since they were 8. and we found them not in china, not in mexico -- but right here in the united states. it's grape harvest season in california. meaning thousands of migrant workers spend up to ten hours a day in the fields picking, packaging and collecting grapes that will end up on tables across america. among them is a worker we will call ralph. an american citizen born here in the u.s. for the last two years, he's worked not on small family
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farms, but in these massive fields. ralph is just 15 years old. other young workers in these same fields keep to the shadows with their faces covered. they are among two dozen children, all american citizens, whom we talked to in the 20,000 square miles that make of california's central valley. 25 million tons of produce worth $20 billion comes out of this region every year. how long have you worked in the fields? >> since like i was like in sixth grade. >> yeah. i was in sixth grade. 11. >> how long you been doing this? >> translator: like seven years. since i was 8 years old. >> reporter: for the most part, it is all legal, because u.s. labor law that usually restricts children from the workplace allows exceptions for agriculture. >> i think most people in the united states have no idea that children are picking their food. >> reporter: the reason they do it? simple economics. >> translator: with just my husband's salary, it is not
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enough. >> reporter: it's simple economics for the farm owners, as well, who would have a har time getting the work done without the extra help. >> i think it's okay for kids that young to be working. >> 12. >> yeah. yeah. now how many hours they work? >> full time. >> so full time meaning 40? >> 50, 60. six days a week, sometimes seven. >> i don't -- i mean that's more than full time if they're going a seven-day week. >> reporter: advocates for farm workers here in washington, d.c. estimate as many as a half a million children currently work in agriculture across america. we reached out several times to more than a dozen different companies that distribute and sell produce that is picked from our fields. among them, sun maid, del monte and dole. they did not return our calls. and coming up, an exclusive look at children working in
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tobacco fields. "forbes" unveils its list of the wealthiest americans. that's next. now, that's what i call a test drive. silverado! the most dependable, longest lasting, full-size pickups on the road. so, what do you think?
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the new "forbes" list of 400
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richest americans. randall lane, welcome. let's go quickly through some of the things that were the criteria, if you will. how much is the total net worth of these people? where do most of them live? how. much did you have to have to make the list? >> you needed 4. -- the average -- you needed $1.1 billion to get on the list. average net worth is $4.2 billion and the aggregate is $1.7 trillion. the rich have never been richer. we surpassed our record in 2008. this is the richest "forbes" 400 ever. it is the biggest minimum to get on. >> and they got richer last year. who are on -- who are at the top of the list and the top three didn't change from one year to the next. >> the only way they change is they got richer. we had bill gates at the top, $66 billion. microsoft stock is soaring. though bill gates only has about 20% of his net worth in microsoft stock.
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he's investing in waste management and all sorts of things outside of microsoft. he's had a very good year. >> of those three, who had the best year? >> ellison was up $8 billion. the other two were up $7 billion. about a tie. but ellison by a nose. >> who's the richest man in media? >> michael bloomberg. $25 billion, the mayor of new york. he owns a cash machine. the valuations up 20%. he cracked our top ten this year. >> top ten, among them. and no big gallup drinks along the way. let's look at some of the social media stars. they break through but one of the biggest losers of the year was mark zuckerberg. >> poor zuck is down more than $8 million. he was flirting with our top ten last year and this year he's in the mid 30s. last year we could have had him higher. we conservatively.
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>> dorsey made a lot of money in twitter but a lot of his fortune owes to square. >> most of it is square. jack dorsey made the list right near the bottom, $1.1 billion. most of the wealth is not from twitter. it is from square. they just got a big investment. they're valuing that company above $3 billion to $4 billion. >> fascinating stuff. tightens up fiphilanthropy. talking about some of the nation's biggest givers, including the andresen couple. coming up in the next hour, how you can soup up your iphone. we take a look at apple's latest and greatest mobile operating system. find out why you should download it and which phones can take the upgrade. we're back in a minute. [ male announcer ] you are a business pro.
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